China bitumen demand drops on ample supply, heavy rains

12 May 2010 06:26  [Source: ICIS news]

SINGAPORE (ICIS news)--Bitumen prices in China have dropped yuan (CNY)80-100/tonne ($12-15/tonne) on reduced demand due to tank top inventories at some key ports and heavy rains in parts of the country, said buyers and sellers on Wednesday.

Domestic values for the key 60/70 PEN grade had dropped to CNY 4,570-4,650/tonne ex-tank, down CNY80-100/tonne from late April, they added.

While inventories at several ports like Shandong and Jiangsu had been piling up since April, the heavy rains in south and east China had depressed demand for bitumen, said regional traders.

Bitumen, which is an extremely dense and viscous derivative of crude, is used in road paving and water-proofing applications in construction.

Spot sales would be slow through May as buyers in China were asking for delayed shipments due to lack of storage space, said a southeast (SE) Asia-based bitumen seller.  

Offers from Singapore, however had not yet dropped sharply as several sellers had already booked volumes for May earlier and most did not have too many spot offers, said a seller.

Selling indications from Singapore were still around $500-505/tonne (€395-399/tonne) FOB (free on board) which would work to $555-560/tonne CFR (cost and freight) south China.

These prices were however, not workable in China due to the lack of buyers currently and even then, buying ideas were generally below $555/tonne CFR south China, said market sources.

According to Chinese government trade statistics, China had imported 407,000 tonnes of bitumen in March, up 57% from the same month last year - and this was part of the reason for the huge inventory pile up in the country, said sources.

China imported a total of 944,000 tonnes of bitumen during the first quarter of 2010, up nearly 9% from the first quarter of 2009 according to official trade statistics.

($1=Y6.83/ $1=€0.79)

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By: Anu Agarwal
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